ARCHIVED -  Public Notice CRTC 1995-61

Public Notice

Ottawa, 21 April 1995

Public Notice CRTC 1995-61

Call For Comments on a Proposal For Canadian Talent Development

Introduction

In Public Notice CRTC 1995-60 issued today, the Commission addressed a number of matters relating to radio.

In this document the Commission calls for comments on a proposal regarding the role that private commercial radio should play in Canadian talent development. This proposal follows informal consultations held by a Task Force led by the Commission's Vice-Chairman for Broadcasting with those individuals and groups that had addressed Canadian talent development in written briefs submitted in response to Public Notice CRTC 1992-72. Those consulted included representatives of the broadcasting industry, the recording industry, recording
artists and the governments of Ontario and Quebec.

Current Approach to Canadian Talent Development

The Commission's current approach to Canadian talent development was set out in Public Notice CRTC 1990-111 entitled An FM Policy For the Nineties:

 The Commission is of the view that the Canadian broadcasting system has an important role in the development of Canadian artists, primarily through airplay. It believes that it is equally important to ensure that an adequate supply of Canadian material is available to offer Canadian listeners a diversity of high quality Canadian content on each station and in various musical as well as spoken word categories. While broadcasters are not solely responsible for seeking out and developing Canadian creative talent, it is clearly in their interest to take an active role in this process to ensure that there is a sufficiently large pool of Canadian recorded music as well as other types of Canadian creative material available for broadcast.

At the time of licence renewal, all licensees of private commercial radio stations are asked to make financial or other commitments to Canadian talent development. Since 1992, however, unprofitable stations have generally been granted relief from financial commitments until profitability has been re-
established.

As well, many applicants include financial commitments to projects relating to Canadian talent development either as part of the benefits proposed when they apply to purchase existing radio stations or in their applications to establish new stations. In such cases, the Commission does not generally grant licensees relief from Canadian talent development commitments, even when stations are unprofitable.

Annual direct cost contributions by private radio broadcasters to Canadian talent development projects total approximately $11 million. This amount includes commitments of some $7 million made in licence renewal applications, while the remaining $4 million represents commitments made in the context of applications for new licences and for transfers of ownership.

Approximately $1.8 million of the $7 million offered as commitments in licence renewal applications consists of payments to third parties, such as the Foundation to Assist Canadian Talent on Record (FACTOR) and MusicAction, as well as national and provincial musical organizations, cultural organizations, performing arts groups, schools and scholarship recipients.

The balance of commitments generally relate to initiatives carried out by stations at a local level which showcase and promote local and regional artists. Examples include sponsorship of talent contests, production of programming featuring live performances, local production of recordings or videos and the sponsorship of concerts.

This latter category of commitments, in particular, requires detailed review both by licensees and by Commission staff. At the time of licence renewal, each initiative proposed for every station is examined to ensure that it qualifies as an eligible Canadian talent development expense under existing guidelines. In addition, the total financial commitment of each station is compared with stations having similar revenues that are located in markets of similar size to ensure that the amount of the commitment is reasonable.

For FM stations, Canadian talent development commitments are applied as conditions of licence. Therefore, changes to the amount of commitments must be processed as applications and are subject to a public process.

Observations of the Music and Broadcast Industries

In their comments, music industry representatives expressed the view that Canadian talent development initiatives are of continuing benefit to artists and to the music industry. Many indicated that FACTOR and MusicAction play an important role and that support for these organizations should be continued. Those consulted also agreed that local initiatives undertaken by stations can be beneficial, but suggested that some local projects are more useful than others. They noted that airplay for new artists was extremely important and should be encouraged.

Representatives of the broadcasting industry suggested that Canadian talent development initiatives should be voluntary. Radio broadcasters argued that they already make a solid contribution to the Canadian music industry by broadcasting the required levels of Canadian music. In their view, licensees should be allowed to choose the level of additional resources that will be devoted to Canadian talent development, particularly in times when the radio industry as a whole is experiencing financial difficulties. As well, they considered that many stations will continue to undertake local Canadian talent development projects, such as talent contests and the production of recordings by local artists, without involvement of the regulator.

Discussion

The Commission continues to believe that Canadian talent development initiatives are important to ensure that an adequate amount of high quality Canadian music and spoken word material is available for broadcast. It also agrees with music industry representatives that Canadian talent development initiatives perform a significant and valuable role in building a healthy Canadian music industry.

The Commission is, however, very concerned about the heavy workload that the current system imposes on both licensees and on its own resources. As indicated earlier, the current procedure requires that every initiative submitted by each station be evaluated and that the total commitment of each station be compared to other stations of similar revenue that are located in markets of similar size. Such a detailed approach is no longer practical in light of the Commission's increased responsibilities and decreasing resources.

The Commission also considers that the current detailed approach is not appropriate at a time when the radio industry as a whole is experiencing financial difficulties and resources must be used in the most efficient manner. It therefore considers that a more streamlined approach to Canadian talent development is essential.

The Commission notes that local Canadian talent development initiatives undertaken by Canadian radio stations not only benefit local artists but also often serve as important promotional vehicles for radio stations. The Commission thus shares the view of the broadcasting industry that some stations may continue to offer local Canadian talent development projects, even in the absence of any formal commitment in their Promises of Performance.

Nevertheless, the Commission has two concerns about the request from the Canadian Association of Broadcasters (CAB) to relieve all licensees from their Canadian talent development obligations.

First, while acknowledging the current financial difficulties of the radio industry, the Commission notes that several third-party organizations rely on Canadian talent development contributions from radio stations for a significant share of their revenues. These organizations have played an important role in increasing the availability of Canadian music by new and established artists. The Commission therefore considers it essential that funding continue to be provided to such organizations by the radio broadcasting industry.

Second, the Commission has a particular concern regarding Canadian talent development contributions proposed in connection with applications to transfer ownership of existing stations and applications for new licences. Because the Commission does not solicit competing applications for authority to transfer effective control of broadcasting undertakings, the onus is on the applicant to demonstrate to the Commission that the application filed is the best possible proposal under the circumstances. The applicant must demonstrate that the proposed transfer will yield significant and unequivocal benefits to the community served by the broadcasting undertaking and to the Canadian broadcasting system, and that it is in the public interest. Commitments to Canadian talent development may be an important factor in the Commission's decision to approve such applications, and these commitments should be met.

Applications for new licences are often considered in competitive circumstances, and commitments to Canadian talent development projects have, to date, frequently formed essential parts of such applications. As such, they may be impor-tant factors in the Commission's decisions to choose one applicant over another. The Commission considers it appropriate to continue to expect that commitments in respect of Canadian talent development that are offered in the context of applications for new stations be fulfilled.

Call For Comments

In light of these concerns, the Commission calls for comments on the following proposal for Canadian talent development:

*  At licence renewal, all private commercial radio stations would make annual direct cash commitments to Canadian talent development which would ensure that FACTOR, MusicAction, and other third-party organizations continue to receive annual funding from radio licensees totalling not less than $1.8 million. These funds would be contributed by individual broadcasters directly to eligible third parties.

*  Licensees would generally be required to fulfil commitments for Canadian talent development accepted as part of benefits packages proposed in applications to transfer effective control of undertakings. Similarly, licensees of new stations in their first term of licence would generally be required to continue to fulfil all Canadian talent development commitments.

The Commission further requests the CAB, as the association representing the majority of private radio licensees, to submit a proposal for a mechanism that would ensure annual payments of at least $1.8 million to eligible third parties, including details as to how such a system would operate and be administered. For example, such a proposal could be based on a system where stations with revenues under two million dollars would contribute a certain fixed amount, while stations with higher revenues contributed according to a formula based on those revenues. In preparing its proposal, the Commission requests that the CAB examine:

1. Whether ownership groups should contribute corporate payments based on the number of stations they own.

2. Alternatively, whether the mechanism should involve contributions based on the revenue of individual stations.

3. Whether commitments for payments to third parties should be made conditions of licence for particular radio stations or whether there is an alternative method whereby payments to eligible third parties can be assured.

The CAB proposal, and all other comments on the Commission's general approach to Canadian talent development set out in this public notice, should be submitted on or before Tuesday, 20 June 1995 and addressed to the Secretary General, CRTC, Ottawa, Ontario K1A 0N2. While receipt of comments by interested parties will not be acknowledged, the comments will be placed on the public file and considered by the Commission as part of this proceeding.

Allan J. Darling
Secretary General